Which of the Following Statements Is CORRECT

question 125

Multiple Choice

Which of the following statements is CORRECT?

• A) Accruals are an expensive but commonly used way to finance working capital.
• B) A conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.
• C) If a company receives trade credit under terms of 2/10,net 30,this implies that the company has 10 days of free trade credit.
• D) One cannot tell if a firm has a conservative,aggressive,or moderate current asset financing policy without an examination of its cash budget.
• E) If a firm has a relatively aggressive current asset financing policy vis-à-vis other firms in its industry,then its current ratio will probably be relatively high.

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Definitions:

Closed-End Question

A type of question designed to receive a specific, limited response, often "yes" or "no", from a given set of options.

Fixed-Alternative

A type of question format in surveys or questionnaires that presents a limited set of answer options from which respondents must choose.

Dichotomous

Pertaining to something divided or separating into two distinct parts or categories.

Dichotomous

Referring to a division or contrast between two things that are or are represented as being opposed or entirely different.